Morgan Stanley has upgraded India’s status to ‘overweight’, as it is of the view that the country is poised for substantial and sustained economic growth at a time when the rest of the world is slowing down. An overweight rating means that the firm expects India’s economy to perform better in the future.
Additionally, it has downgraded its rating on China to ‘equal-weight’.
India’s macro indicators remain resilient, and the economy is on track to achieve the 6.2% GDP forecast, the firm said. India, it said, is now the top-ranked and most-preferred market among emerging markets (EMs), rising from the sixth spot due to supportive foreign inflows, macro stability, and a positive earnings outlook.
“India rises from 6 to 1 in our process, with relative valuations less extreme than in October, and India’s ability to leverage multipolar world dynamics is a significant advantage,” it said.
The ongoing trend of a Multipolar World is driving foreign direct investment (FDI) and portfolio flows, and India’s reform-oriented and macro-stable agenda strengthens its prospects for robust capital expenditure (capex) and profitability outlook, the brokerage firm said in its report.
This came just four months after Morgan Stanley previously elevated India from ‘underweight’ to ‘equal weight’ on March 31, citing factors such as a reduced valuation premium and the resilient economy.
Furthermore, it has also made specific sector upgrades for India, including industrials, financials, and consumer discretionary stocks, which are now rated as ‘overweight’.
